Huobi Global’s stablecoin exchange balance fell 51% in the seven days to Tuesday for an outflow of over US$105 million, according to data from blockchain analytics firm Nansen. The Seychelles-based crypto exchange is in turmoil amid insolvency rumors and investigations by the Chinese police.
On Sunday, crypto analyst Adam Cochran highlighted a recent bulk sell-off of the USDT stablecoin across cryptocurrency exchanges, including Binance.
Cochran attributed the sell-off to a potential Huobi insolvency issue related to stUSDT — a staked USDT product recently launched on the Tron blockchain. Tron’s founder Justin Sun is an advisor and stakeholder at Huobi.
Launched in July 2023 and billed as the “world’s first real world asset” product, stUSDT allows investors to stake their USDT to earn yields. Sun claims that stUSDT is backed by government bonds carrying a yield of 4.29%.
Cochran’s analysis found that, while the stUSDT website claims it has 351,411 stakers, 98% of staked USDT is directly held by addresses related to either Sun or Huobi.
That staked USDT “gets swept into a Huobi deposit address,” Cochran said, where a significant portion is then recycled into Sun-held decentralized finance protocols. This has produced a US$500 million discrepancy in redemptions from Huobi addresses on Tron, which — if functioning as expected — would otherwise have gone towards buying bonds for yield.
Although Huobi’s own “Merkle Tree Audit” showed on July 1 that Huobi users held US$630 million in USDT and the platform had a wallet balance of US$631 million in USDT, the audit stopped updating last month. DefiLlama data shows that the exchange only had a combined USDT and USDC balance of around US$93 million when Cochran posted his tweets over the weekend.
“So users *think* they have balances of $631M in Huobi, but there is only $90M there,” Cochran said on Twitter. “The rest Justin Sun is using to prop up his other defi apps, and paying a yield on it to get users to deposit more into Huobi.”
Adding to Huobi’s trevails, Hong Kong online media Techub News reported on Saturday that several of Huobi’s executives were detained by the Chinese police and under investigation, citing unnamed sources. Cochran pointed to that news in his analysis as a sign of Huobi’s alleged insolvency issues.
Xie Jiayin, head of social media at Huobi, took to Twitter Saturday to dismiss the news.
“This malicious rumor has been confirmed untrue, and Huobi is currently doing well,” he said.
In an email response to Forkast, Huobi refuted allegations regarding detention issues.
In an additional Monday blog post to its global website, Huobi responded to what it called “the spreading of FUD [fear, uncertainty, doubt],” adding that the platform is “operating as usual.” The blog post did not mention the alleged insolvency or detention issues.
On Tuesday, an address reportedly related to Sun transferred 200 million USDT into Huobi, according to crypto data tracker PeckShield Alert. The transfer boosted the exchange’s USDT balance to 273.54 million.
Huobi later received a single inflow of 5,000 ETH (over US$9.16 million) from another address linked to Sun. However, a Huobi spokesperson denied Sun’s link to the addresses.
Huobi’s social media head Xie said on his Medium blog account on Tuesday that some blockchain data platforms did not fully display Huobi’s assets and addresses.
“For example, the data platforms previously did not fully display our recently added and updated addresses, nor did they display stUSDT,” said Xie. “The current data can mainly be viewed on Nansen and DefiLlama.”
According to Xie, Huobi has been “actively contacting” data providers to update the information about its assets. Xie said that DefiLlama — after receiving evidence of Huobi’s investments in real-world assets — have included stUSDT in its data.
DefiLlama added stUSDT to Huobi’s list of tokens on Tuesday, and shows Huobi currently has US$401.07 million in stUSDT.
stUSDT data prior to August 8 is not available on the platform.
(Updates with Huobi’s response regarding detention issues)
